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Measuring the quality of the consumer's basket

Summary

This article describes an approach to the measurement of the change in the quality of the consumer's basket, based on shifts in the basket composition toward and away from luxury goods and necessities. One of the results is that the income elasticity of the demand for quality appears to be equal to a weighted variance of the income elasticities of the individual goods and services. The discussion includes an application to the annual changes in the Dutch consumer's basket from 1922 to 1963 as well as an analysis of the decomposition of quality change between and within commodity groups.

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Additional information

Research supported in part by the National Science Foundation under Grant GS-30084.

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Theil, H. Measuring the quality of the consumer's basket. De Economist 121, 333–346 (1973). https://doi.org/10.1007/BF01713161

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Keywords

  • International Economic
  • Public Finance
  • Annual Change
  • Weighted Variance
  • Individual Good